ON ITS OWN TWO FEET

Ecuador 2019 | FINANCE | INTERVIEW

TBY talks to Felipe Sánchez. Managing Partner of Kreston International on the Finance sector.

Felipe Sánchez
BIOGRAPHY
Joining the company in 2007, Felipe Sánchez has been a managing partner of Kreston International in Ecuador since 2013. He graduated with a degree in commercial engineering from the Pontificia Universidad Catolica del Ecuador and obtained post-graduate training in accounting and auditing in the US, Mexico, Peru, Argentina, Colombia, Chile, Puerto Rico, and Brazil. Prior to Kreston, he was a partner at Moores Rowland, heading the Quito office.

Could you tell us more about your service portfolio and client range in Ecuador?

Kreston International is a global network of audit firms that targets a range of companies worldwide, primarily SMEs. As members of Kreston International, we have access to technology and a global knowledge of this network. Although our main target is SMEs, we also have large clients such as La Fabril, Cerveceria Nacional, Novacero, and Schlumberger, among others, so we have a quite varied client portfolio. We serve both the public and private sectors in Ecuador, although the public sector is slightly more complicated. Legal uncertainty remains a challenge; for example, a contract signed with a public entity was once terminated due to administrative changes. We have a team of 80 in Ecuador, and our main service is auditing private and public companies.

What are some common challenges for international companies in Ecuador?

Legal insecurity is the biggest challenge. Unfortunately, during the past decade, the philosophy of the overbearing state has only been exacerbated. As a result, the regulations to which we are exposed to in the private sector are excessive and costly. This scenario prevents private companies from developing. The public sector rarely produces wealth, but always leans on the private sector to do so.

What are your expectations for the new legislation?

The current government is trying to create an opportunity for the economy to change trends by opening the market up to the world, in contrast to the previous government. As such, the new legislation brings certain incentives through laws and regulations, but we might need more action to improve the general investment climate. For example, there are still high tariffs on imports, and a tax on transferring foreign currency abroad. The public-private partnerships have not yielded good results to date because there is no confidence in the country. Due to the series of obstacles that exist and the difficulties for investors to repatriate capital, the majority of foreign actors are unwilling and hesitant to invest here. Equally important, the percentage of taxes we pay is too high, which prevents us from being more attractive for this type of investment.